SEC Info - Akorn Inc - ‘10QSB’ for 9/20/94

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Akorn Inc – ‘10QSB’ for 9/20/94

As of: Friday, 5/12/95 · For: 9/20/94 · Accession #: 906280-95-37 · File #: 0-13976

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 5/12/95  Akorn Inc                         10QSB       9/20/94    4:45K                                    Jones Walker… Denegre/FA

Quarterly Report — Small Business — Form 10-QSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10QSB       Quarterly Report -- Small Business                    16     64K 
 2: EX-11       Statement re: Computation of Earnings Per Share        1      5K 
 3: EX-27       Financial Data Schedule (Pre-XBRL)                     1      8K 
 4: EX-99       Miscellaneous Exhibit                                  5     26K

10QSB — Quarterly Report — Small Business
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Changes in Securities Defaults Upon Senior Securities Exhibits and Reports on Form 8-K Financial Statements (Unaudited) Legal Proceedings Management's Discussion and Analysis or Plan of Operation Other Information Submission of Matters to a Vote of Security Holders
1	1st Page - Filing Submission
2	Item 1. Financial Statements (Unaudited)
"	Item 2. Management's Discussion and Analysis or Plan of Operation
14	Item 1. Legal Proceedings
"	Item 2. Changes in Securities
"	Item 3. Defaults Upon Senior Securities
"	Item 4. Submission of Matters to a Vote of Security Holders
"	Item 5. Other Information
"	Item 6. Exhibits and Reports on Form 8-K

10QSB 1st Page of 16 TOC ↑Top Previous Next ↓Bottom Just 1st
 
UNITED STATES       
SECURITIES AND EXCHANGE COMMISSION            
Washington, D.C.  20549             

FORM 10-QSB             

(X)   Quarterly Report Pursuant to Section 13 or 15(d) of the         
Securities Exchange Act of 1934             
For the quarterly period ended March 31, 1995             

( )   Transition Report Pursuant to Section 13 or 15(d) of the        
Securities Exchange Act of 1934             
For the transition period from _______ to _______             

Commission File Number:   0-13976             

AKORN, INC.             
(Exact Name of Registrant as Specified in its Charter)            

LOUISIANA                         72-0717400                
(State or Other Jurisdiction of     (I.R.S. Employer                  
Incorporation or Organization)      Identification No.)               

100 Akorn Drive                                             
Abita Springs, Louisiana                  70420                   
(Address of Principal Executive Offices)       (Zip Code)                       

(504) 893-9300                
(Issuer's telephone number)               

Check whether the issuer (1) has filed all reports required to be     
filed by Section 13 or 15(d) of the Securities Exchange Act of        
1934 during the past 12 months (or for such shorter period that       
the Registrant was required to file such reports), and (2) has        
been subject to such filing requirements for the past 90 days.        
Yes X               No                                                

At May 5, 1995 there were 14,885,217 shares of common stock, no       
par value, outstanding.                                               

Transitional Small Business Disclosure Format.   Yes    No X          

10QSB 2nd Page of 16 TOC 1st Previous Next ↓Bottom Just 2nd
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)                             

The following financial statements are provided on the page           
numbers indicated below:                                              

Condensed Consolidated Balance Sheets -                               
March 31, 1995 and June 30, 1994                        2         

Condensed Consolidated Statements of Income -                         
Three months and nine months ended March                          
31, 1995 and 1994                                       4         

Consolidated Statements of Shareholders' Equity -                     
Nine months ended March 31, 1995 and 1994               5         

Condensed Consolidated Statements of Cash Flows -                     
Nine months ended March 31, 1995 and 1994               6         

Notes to Condensed Consolidated Financial                             
Statements                                              7         

Item 2.  Management's Discussion and Analysis                         
or Plan of Operation                              

The information called for by this item is provided on page 9.        

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AKORN, INC.   

CONDENSED CONSOLIDATED BALANCE SHEETS   

(UNAUDITED)   

                                                                [Download Table]


                                        March 31,               June 30,      
                                          1995                   1994<FN1>    
                                   ___________________    ____________________

                                                                              
ASSETS                                                                        

CURRENT ASSETS                                                                
 Cash and cash equivalents            $      726,942            $ 1,914,735   
 Short-term investments                    1,412,249              1,735,040   
 Accounts receivable                                                          
  (less allowance for bad debts of                                            
  $238,559 and $247,296 at March 31                                           
  and June 30, respectively)               4,594,638              4,793,522   
 Inventory                                 6,477,659              4,721,637   
 Deferred income taxes                       546,822                550,715   
 Prepaid expenses and other assets           715,914                455,873   
                                     ____________________  ___________________
  TOTAL CURRENT ASSETS                    14,474,224             14,171,522   

PROPERTY, PLANT AND EQUIPMENT             12,069,990             11,752,313   
Accumulated depreciation                  (6,621,625)            (5,982,874)  
                                     ____________________  ___________________
                                           5,448,365              5,769,439   
Construction in progress                   4,209,349                479,883   
                                     ____________________  ___________________
                                           9,657,714              6,249,322   
                                     ____________________  ___________________

OTHER ASSETS                               1,035,455                800,367   

TOTAL ASSETS                          $   25,167,393            $21,221,211   
                                     ===================== ===================

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                                                                [Download Table]


                                        March 31,               June 30,      
                                          1995                   1994<FN1>    
                                     _____________________  __________________

                                                                              
LIABILITIES AND SHAREHOLDERS'                                                 
EQUITY                                                                        

CURRENT LIABILITIES                                                           
 Short-term borrowings                $      343,000            $        -    
 Current installments of long-term                                            
  debt and capital lease obligations         383,708                119,002   
 Accounts payable                          1,844,534              2,516,629   
 Accrued reorganization costs                505,908                933,836   
 Income taxes payable                        353,524                711,146   
 Accrued expenses and other liabilities    2,616,480              2,270,101   
                                      ____________________   _________________
  TOTAL CURRENT LIABILITIES                6,047,154              6,550,714   

LONG-TERM DEBT AND                                                            
 CAPITAL LEASE OBLIGATIONS                 3,513,222                798,896   
PRE-FUNDED DEVELOPMENT COSTS                 384,501                900,000   
OTHER LONG-TERM LIABILITIES                1,010,104                628,545   

SHAREHOLDERS' EQUITY                                                          
 Common stock, no par value--                                                 
  authorized 20,000,000 shares;                                               
  issued 15,115,673 shares                                                    
  at March 31, and June 30;                                                   
  outstanding 14,885,217 and 14,798,217                                       
  shares at March 31 and June 30,                                             
  respectively                            13,701,845             13,701,845   
 Treasury stock, at cost--                                                    
  230,456 and 317,456 shares                                                  
  at March 31 and June 30,                                                    
  respectively                              (329,939)              (503,939)  
 Retained earnings (deficit)                 840,506               (822,806)  
 Unrealized loss on noncurrent                                                
  marketable equity securities                     -                (32,044)  
                                      ___________________  ___________________
   TOTAL SHAREHOLDERS' EQUITY             14,212,412             12,343,056   
                                      ___________________  ___________________

   TOTAL LIABILITIES AND                                                      
    SHAREHOLDERS' EQUITY              $   25,167,393            $21,221,211   
                                      ===================  ===================


<FN1> Condensed from audited consolidated financial statements.                 
See notes to condensed consolidated financial statements.           

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AKORN, INC. 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

(UNAUDITED) 

                                                        [Enlarge/Download Table]

                               Three months ended                     Nine months ended           
                                     March 31,                           March 31,                
                             1995               1994              1995                 1994       
                          ______________  _______________    _______________    _______________   

                                                                                                  
Net sales                  $ 7,502,580      $ 7,268,144        $ 24,427,958      $   19,771,845   
Cost of sales                4,791,289        4,238,393          14,484,222          11,686,927   
                          ______________  _______________    _______________    ________________  
  GROSS PROFIT               2,711,291        3,029,751           9,943,736           8,084,918   

Selling, general and                                                                              
 administrative expenses     1,936,062        2,008,526           6,654,320           5,902,514   
Research and development       211,254          252,796             561,618             619,230   
                          ______________  ________________   ________________   _________________ 
                             2,147,316        2,261,322           7,215,938           6,521,744   
                          ______________  ________________   ________________   _________________ 
  OPERATING INCOME             563,975          768,429           2,727,798           1,563,174   

Interest expense                     -           (17,809)                 -            (131,986)  
Interest and other                                                                                
  income (expense)            (237,834)           27,682           (186,176)             78,303   
                          _______________  _______________   _________________  _________________ 
                              (237,834)            9,873           (186,176)            (53,683)  
                          _______________  _______________   _________________  __________________
  INCOME BEFORE                                                                                   
   INCOME TAXES                326,141            778,302         2,541,622           1,509,491   

 Income taxes                   97,842            151,600           922,206             286,870   
                          _______________  ________________  _________________  __________________

  NET INCOME                $  228,299        $   626,702      $  1,619,416      $    1,222,621   
                          ===============  ================  =================  ==================

Per Share:                                                                                        

  NET INCOME               $       .01         $      .04       $       .10      $          .08   
                          ===============  ================  =================  ==================

  WEIGHTED AVERAGE                                                                                
    SHARES OUTSTANDING      15,519,988          15,548,388       15,447,119          15,318,378   
                          ===============  ================  =================  ==================

See notes to condensed consolidated financial statements.                       

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                          AKORN,  INC.

                         CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  EQUITY

                         (UNAUDITED)

                                                        [Enlarge/Download Table]
                                                               Unrealized                                                       
                                                                                                        Loss                    
                                                                                                     on Noncurrent              
                                                Common Stock              Retained                    Marketable                
                                          Shares                          Earnings       Treasury       Equity                  
                                        Outstanding       Amount         (Deficit)        Stock      Securities     Total       
                                     _______________  ______________  ______________  ___________ ______________ ______________ 
                                                                                                                                
Nine Months Ended March 31, 1995:                                                                                               

Balances at July 1, 1994               14,798,217     $ 13,701,845    $  (822,806)   $   (503,939)  $  (32,044)  $   12,343,056 
Net income for the nine months                                                                                                  
 ended  March 31                                                        1,619,416                                     1,619,416 
Additional unrealized loss on noncurrent                                                                                        
  marketable equity securities                                                                        (275,661)        (275,661)
Write-down of noncurrent                                                                                                        
 marketable equity securities to market                                                                                         
 value                                                                                                 307,705          307,705 
Exercise of stock options                  34,917                           8,824          69,834                        78,658 
Shares issued from treasury in                                                                                                  
 connection with the Company's                                                                                                  
 Employee Stock Purchase Plan              52,083                          35,072         104,166                       139,238 
                                     ______________  _______________  ______________  ____________ _____________ _______________
Balances at March 31, 1995             14,885,217     $  13,701,845   $   840,506    $   (329,939)  $        -   $   14,212,412 
                                     ==============  ===============  ==============  ============ ============= ===============

Nine Months Ended March 31, 1994:                                                                                               

Balances at July 1, 1993               12,781,317     $  10,701,845   $ (3,561,768)  $   (641,573)  $        -   $    6,498,504 
Net income for the nine months                                                                                                  
 ended  March 31                                                         1,222,621                                    1,222,621 
Exercise of stock options and                                                                                                   
 warrants                               2,010,000         3,000,000           (700)         20,000                    3,019,300 
Shares issued from treasury in                                                                                                  
 connection with the Company's                                                                                                  
 Employee Stock Purchase Plan              43,509                           13,760          87,018                      100,778 
                                     _______________  _______________  ______________  ____________ ____________ _______________
Balances at March 31, 1994             14,834,826     $  13,701,845    $ (2,326,087)   $  (534,555) $         -  $   10,841,203 
                                     ===============  ===============  ==============  ============ ============ ===============

See notes to condensed consolidated financial statements.                                                                       


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 AKORN, INC.

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (UNAUDITED)

                                                                [Download Table]


                                                Nine Months Ended March 31,   
                                                    1995           1994       
                                               ______________ _______________ 
                                                                              
OPERATING ACTIVITIES                                                          
 Net income                                    $   1,619,416     $ 1,222,621  
 Adjustments to reconcile net income to net                                   
  cash provided by (used in) operating activities:                            
   Depreciation and amortization                     731,077         500,430  
   Realized loss on noncurrent marketable                                     
    equity securities                                307,705               -  
   Changes in operating assets and liabilities:                               
    Inventory                                     (1,756,022)        (538,806)
    Other                                         (1,513,317)         360,110 
                                               _______________  ______________
NET CASH PROVIDED BY (USED IN)                                                
 OPERATING ACTIVITIES                               (611,141)       1,544,355 

INVESTING ACTIVITIES                                                          
 Purchases of property, plant and equipment       (4,047,143)        (809,552)
 Net maturities (purchases) of investments           322,791       (1,384,878)
 Product licensing costs                            (376,729)        (363,650)
                                               _______________  ______________
NET CASH USED IN INVESTING ACTIVITIES             (4,101,081)      (2,558,080)

FINANCING ACTIVITIES                                                          
 Repayment of long-term debt                        (905,341)         (68,064)
 Proceeds from sale of stock                         217,896        1,520,078 
 Proceeds from issuance of long-term debt          3,900,000                - 
 Pre-funded development costs                        (15,499)               - 
 Reductions in capital lease obligations             (15,627)        (462,346)
 Short-term borrowings                               343,000                - 
                                               _______________  ______________
NET CASH PROVIDED BY                                                          
  FINANCING ACTIVITIES                             3,524,429          989,668 

DECREASE IN CASH                                                              
 AND CASH EQUIVALENTS                             (1,187,793)         (24,057)

 Cash and cash equivalents at beginning                                       
   of period                                       1,914,735          957,108 
                                              _______________   ______________
CASH AND CASH EQUIVALENTS                                                     
 AT END OF PERIOD                              $     726,942     $    933,051 
                                              ===============   ==============

SUPPLEMENTAL DISCLOSURE                                                       
 OF CASH FLOW INFORMATION:                                                    
 Interest paid, net of amount capitalized      $          -      $    172,430 
                                              ===============   ==============

 Income taxes paid                             $   1,092,750     $          - 
                                              ===============   ==============
SUPPLEMENTAL DISCLOSURE                                                       
 OF NONCASH INVESTING AND                                                     
 FINANCING ACTIVITIES:                                                        
 Conversion of debt to common stock            $          -      $  1,600,000 

                                              ===============    =============


See notes to condensed consolidated financial statements.                       

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                 AKORN, INC.

                  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                 (UNAUDITED)

NOTE A - BASIS OF PRESENTATION                              

     The   accompanying  unaudited  condensed  consolidated  financial
     statements  include  the  accounts of Akorn, Inc. (the "Company")
     and   its   wholly   owned  subsidiaries,   Spectrum   Scientific
     Pharmaceuticals, Inc.  ,  Walnut  Pharmaceuticals, Inc. and Akorn
     Manufacturing,   Inc.,   formerly   Taylor   Pharmacal   Company.
     Intercompany transactions and balances  have  been  eliminated in
consolidation.                                              

     These financial statements have been prepared in accordance  with
     generally  accepted  accounting  principles for interim financial
     information   and   with  the  instructions   to   Form   10-QSB.
     Accordingly,  they  do   not  include  all  the  information  and
     footnotes required by generally  accepted  accounting  principles
     for complete financial statements.  In the opinion of management,
     all   adjustments   (consisting  of  normal  recurring  accruals)
     considered necessary  for a fair presentation have been included.
     Operating results for the  nine-month period ended March 31, 1995
     are  not  necessarily indicative  of  the  results  that  may  be
     expected  for  the  year  ending  June  30,  1995.   For  further
     information,  refer  to the consolidated financial statements and
     footnotes for the year  ended  June  30,  1994,  included  in the
Company's Annual Report on Form 10-KSB.                     

NOTE B - INCOME TAXES                                       

     The  Internal  Revenue  Service  (IRS) is currently examining the
     Company's  federal  income tax returns  for  1988  through  1993.
     Based on discussions with Company management, it appears that the
     IRS may seek adjustments  to  these returns which could result in
     additional  interest  and  income  tax  expense  of  $300,000  to
     $500,000.   The  Company  has  adequate  reserves  such  that  if
     proposed  and  sustained,  these adjustments  would  not  have  a
material impact on the consolidated financial statements.   

NOTE C - EARNINGS PER SHARE                                 

     Earnings per share are based  upon the weighted average number of
     common  shares  outstanding.  The  computation  of  the  weighted
     average number of  shares  outstanding  for all periods presented
     includes the dilutive effect of stock options  and warrants using
the treasury stock method.                                  

NOTE D - INVENTORY                                          

The components of inventory are as follows:                 

                                   March 31,    June 30,
                                   1995         1994
                                    ______________ _____________

 Finished goods                     $  4,245,999   $ 2,553,051
 Work in process                         976,450       883,152
 Raw materials and supplies            1,255,210     1,285,434
                                    ______________ _____________
                                    $  6,477,659   $ 4,721,637

     The inventories are reported net of reserves for unsaleable items
     of  $286,653 and $282,531 as of March 31, 1995 and June 30, 1994,
respectively.                                               

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NOTE E - INVESTMENTS                                        

     The Company  adopted  Statement  of  Financial  Standards No. 115
     (SFAS  115),  "Accounting  for  Certain Investments in  Debt  and
     Equity  Securities"  effective  July  1,  1994.   This  Statement
     requires certain securities to be  classified  into  one of three
     reporting  categories  (held-to-maturity,  available-for-sale  or
     trading).  The Company has completed a review  of  its securities
     relative   to   SFAS  115  and   has  classified  its  short-term
     investments as held-to-maturity.   Therefore,  in accordance with
     SFAS  115,  these   investments are being reported  at  amortized
     cost.  The Company has  defined  its  noncurrent  investments  as
     available-for-sale,  requiring that they be carried at fair value
     with any unrealized gain  or  loss  reflected  as  a component of
shareholders' equity.                                       

     At   March  31,  1995,  the  cost  of  the  Company's  noncurrent
     marketable   equity  securities  exceeded  the  market  value  by
     $307,705.  Given  the  significant  decline in market value since
     June  30, 1994, and Management's assessment  that  a  significant
     reversal  was  not  imminent,  the  loss  was  determined  to  be
     permanent.   Therefore, the unrealized loss previously charged to
     shareholders'  equity  was  reversed,  and the Company recorded a
     realized loss to recognize the decline in   value.   This loss is
     included  in  interest  and  other  income (expense) in the  1995
statements of income.                                       

NOTE F - LONG TERM DEBT                                     

     On September 30, 1994, the Company finalized  its  loan agreement
     with   a  commercial  bank  to  obtain  $6.3  million  of  credit
     financing.   Under  the terms of the  agreement, the Company will
     receive  financing under  a three-part credit facility:  (1) $3.5
     million Revolver/Term construction  loan,  (2)  $1.3 million Term
     loan, and (3) $1.5 million Line of Credit.  As of March 31, 1995,
     the Company had received $1.3 million in financing under its Term
     loan  and  advances  of  $2.6  million  under  its  Revolver/Term
     construction loan.  In addition, $343,000 was borrowed  under the
     Line of Credit as of March 31, 1995. The Company is utilizing the
     monies advanced under its Revolver/Term construction loan to fund
     the   expansion  of  its  manufacturing  facilities  in  Decatur,
     Illinois.   The  $1.3  million Term loan was used for refinancing
     approximately $900,000 in existing debt and also to refinance the
     early payout of a capital  lease  on  the  Decatur  manufacturing
     facility.   Interest incurred during the construction  period  is
     being capitalized  as  part of the cost of the expansion project.
     During the nine months and  quarter  ended  March  31,  1995, the
     Company  capitalized  $179,499  and  $135,774,  respectively,  in
interest costs.                                             

NOTE G - LITIGATION                                         

     The Company is involved in various litigation and  claims arising
     in  the  normal  course  of  business.   The Company's management
     believes that any liability the Company may have in these matters
     would  not  have a material effect on the consolidated  financial
statements.                                                 

NOTE H - CHANGE IN ACCOUNTING ESTIMATE                      

     During the quarter  ended  March  31,  1995, an evaluation by the
     Company resulted in a change in the estimated  liability  related
     to aged customer credits.  This change resulted in a reduction of
     selling  general  and  administrative  expenses  of approximately
$330,000 ($231,000 or 1 cent per share, net of tax).        

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                 AKORN, INC.

                 MANAGEMENT'S  DISCUSSION AND ANALYSIS

                  OR PLAN OF OPERATION

RESULTS OF OPERATIONS                                       

Net Sales                                                   
     The Company experienced nominal sales growth of 3% in the quarter
     ended  March 31, 1995 compared to the same period in  1994,  with
     sales of  $7.5  million  versus $7.3 million.  For the first nine
     months of fiscal 1995, sales  of  $24.4  million  were 24% higher
than the comparable fiscal 1994 amount of $19.8 million.    

     The decline in sales growth for the third quarter as  compared to
     the  first  six  months of fiscal 1995 is due to several factors.
     First,  there  was the  anticipated  loss  of  AK-Con-A,  Akorn's
     leading allergy  product.   As previously announced, AK-Con-A was
     recently converted to over-the-counter  (OTC)  from  prescription
     status by the Food and Drug Administration (FDA).  Currently, the
     Company  is  awaiting  approval  to  begin marketing this product
     under its new status, which presently  is  anticipated  for  some
time in fiscal 1996.                                        

     Upon receiving FDA approval, the new OTC version will be marketed
     through  a  joint  venture,  which  should restore profits on the
     product to previous levels.  Sales of  AK-Con-A,  which continued
     through  October 1994, were approximately $2 million  for  fiscal
     1995.   Until  approval  of  the  OTC  version  is  obtained  and
     marketing  through  the  joint venture commences, the loss of AK-
     Con-A  will  continue  to  have   an   effect   on  sales  growth
comparisons.                                                

     Second,  sales and earnings were also affected by  the  temporary
     shutdown of  Akorn's  Decatur, Illinois manufacturing facility as
     required  by  the previously  announced  $4.5  million  expansion
     project.  The shutdown  was  about  a week longer than originally
     anticipated, affecting both sales and overhead absorption for the
     quarter.  The facilities returned to  full  production in January
1995, at which time the effect of the shutdown ended.       

     Third,  sales  and  earnings  during  the quarter  were  hurt  by
     continued cost increases implemented by  our primary suppliers of
     private-labeled  products.  These  suppliers   are  also  Akorn's
     primary  competitors in the generic market place,  and  this  has
     made Akorn  substantially  less  competitive.  In the short-term,
     the Company is combating higher product  costs  by  sourcing from
     alternative   non-competing   suppliers   under   more  favorable
     agreements.   Longer-term, the Company's goal to manufacture  all
     of  its  products  in-house  will  eliminate  reliance  on  other
manufacturers and make Akorn more competitive.              

Gross Profit                                                
     Consolidated  gross  profit  declined  11% to $2.7 million in the
     quarter ended March 31, 1995 compared to  $3.0  million  for  the
     same  period  of  the previous year, with gross margins declining
     six percentage points.  For the first nine months of fiscal 1995,
     gross profit of $9.9  million  was 23% higher than the comparable
     fiscal 1994 amount of $8.1 million,  while gross margins remained
stable.                                                     

     The  loss  of  higher-margin AK-Con-A sales,  decreased  overhead
     absorption in manufacturing  and  higher product costs imposed by
     suppliers  were the primary reasons  for  the  decline  in  gross
     profit and margins  for  the quarter.  The current quarter effect
     from the shutdown of the Decatur  facilities  will  not continue.
     However,  gross  margins are expected to remain lower than  those
     experienced in the  first  half of fiscal 1995 due to the loss of
AK-Con-A and increased competition from our suppliers.      

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Selling, General and Administrative Expenses                

     Selling, general and administrative  (S,G&A) expenses declined 4%
     during the quarter ended March 31, 1995,  as compared to the same
     period in 1994.  For the first nine months  of fiscal 1995, S,G&A
     expenses  were 13% higher than the comparable  period  in  fiscal
     1994.  During  the  quarter  ended  March  31, 1995, the Company,
     based  on evaluations made by management, changed  the  estimated
     liability  related  to aged customer credits.  This resulted in a
     reduction in S,G&A expenses  of  approximately $330,000.  Without
     this change in estimate, the Company  would  have  realized S,G&A
     expenses  of  approximately  $2.3  million  or 13% more than  the
comparable period in fiscal 1994.                           

     In response to a slowing in sales growth during the quarter ended
     March 31, 1995, the Company took steps to eliminate approximately
     $1  million  to  $1.5  million  of S,G&A and other  manufacturing
     operating   expenses  on  an  annualized   basis.    The   future
     reductions, which  were accomplished primarily through downsizing
     the  workforce,  will   be   somewhat   offset  by  increases  in
     depreciation and interest expense associated  with  the Company's
     expanded   manufacturing   facilities.    During   the   quarter,
     approximately  $100,000  of  nonrecurring  severance  costs  were
recognized in connection with the downsizing.               

     The  percentage of S,G&A expenses to sales, excluding the effects
     of the  change  in  estimate  and severance payments noted above,
     remained relatively stable during  the quarter and nine months of
     fiscal  1995  as  compared  to  the  prior   year.   The  Company
     anticipates that the percentage of S,G&A to sales will decline as
     a  result  of  the  reductions  made  in the third quarter.   The
     Company continues to monitor the required level of S,G&A expenses
in relation to sales performance.                           

Research and Development                                    

     Research and development expense remained  relatively  stable for
     the quarter and first nine months of fiscal 1995 as the Company's
     R  & D group continued to pursue Abbreviated New Drug Application
(ANDA) approvals on new products.                           
     R &  D  activities continue to be focused also on the transfer of
     ANDA approvals from the Company's former manufacturing facilities
     in  California   to  its  manufacturing  facilities  in  Decatur,
     Illinois ("site transfers").   The  cost  of these site transfers
     have been previously accrued and do not have  an  effect on R & D
expense.                                                    

     The  Company  also  has  begun the development of a non-steroidal
     anti-inflammatory drug for  ophthalmic  use licensed from Pfizer,
     Inc.  (Pfizer).   It is anticipated that the  majority  of  these
     development costs,  which are expected to be funded substantially
     by monies obtained from Pfizer, will be incurred over the next 18
     months.  Based on the  current  mix  of products in the Company's
     R&D pipeline, management expects fiscal  1995  R&D expenses to be
     comparable to fiscal 1994 amounts and expects an  increase in R&D
expenses for fiscal 1996.                                   

Interest and Other Income/Expense                           

     Interest costs incurred during the quarter and nine-month  period
     ended March 31, 1995 have been capitalized as part of the cost of
     construction  related  to  the Company's expansion project at its
     Decatur manufacturing facilities.   The  Company will continue to
     capitalize  interest  expense until the newly  constructed  clean
     room and other expansion  related  items  are fully validated and
     operational.  This is currently expected to  be  completed in the
     fourth quarter of fiscal 1995.  On September 30, 1994 the Company
     signed a $6.3 million financing package with a commercial bank to
     finance the construction and provide working capital funding.  As
     a result, interest expense will increase significantly  in fiscal
1996.                                                       

     During  the  quarter ended March 31, 1995, the Company determined
     that a $308,000  decline  in  the  fair market value of an equity
     investment was other than temporary.  The determination was based
     on the significant deterioration in value since June 30, 1994 and
  the current evaluation that a price recovery was not imminent.

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     The original investment, in the amount of $350,000, had been made
     in a business from which the Company  was  considering  licensing
technology for ophthalmic use.                              

     This  loss  resulted  in  the Company reporting net interest  and
     other expense of $238,000 for  the  quarter  ended March 31, 1995
     compared  to  net  interest and other income of $10,000  for  the
     comparable period in fiscal 1994.  This loss also resulted in net
     interest and other expense  of $186,000 for the nine months ended
     March  31,  1995  compared  to net  expense  of  $54,000  in  the
     comparable prior year period.   Net  interest income increased in
     the  fiscal  1995  periods  as  a result of  increases  in  funds
     available  for  investment and increases  in  interest  rates  on
short-term securities.                                      

Income Taxes                                                

     The effective tax rates for the quarters ended March 31, 1995 and
     1994 were 30.0% and  19.5%,  respectively.   For  the  first nine
     months  of  fiscal  1995  and 1994, the effective tax rates  were
36.3% and 19.0%, respectively.                              

     The increased effective tax  rate for fiscal 1995 is attributable
     to the lack of available net operating  loss  carryforwards,  the
     benefits  of  which were utilized to reduce income tax expense in
     1994.  The decline  in  the  effective rate for the quarter ended
     March 31, 1995 as compared to  the  effective  rate  for the nine
     months   then   ended  reflects  changes  associated  with  lower
     anticipated  income   levels   for  the  fiscal  year  and  minor
adjustments related to filed tax returns.                   

Net Income                                                  

     Net  income for the quarter ended  March  31,  1995  declined  to
     $228,000 or 1 cent per share compared to the prior year amount of
     $627,000  or  4  cents  per  share,  primarily as a result of the
     factors noted above coupled with higher  income  tax  rates.  Net
     income  for the first nine months of fiscal 1995 of $1.6  million
     or 10 cents  per  share was 32% greater than the comparable prior
     year amount of $1.2  million or 8 cents per share.  This increase
     for the nine-month period  resulted  primarily  from  the  growth
     experienced  in  the  first  six months of fiscal 1996 associated
     with the Company's temporary selling  advantage  for  its allergy
     product line.  Weighted average shares used in the calculation of
  per share amounts were relatively unchanged from year to year.

Financial Condition and Liquidity                           

     The  net  cash  used in operating activities for the nine  months
     ended March 31, 1995  was  $611,000 compared to net cash provided
     of approximately $1.5 million  for  the  corresponding  period in
     1994.   While the Company's profitability has increased operating
     cash flows  in  the first nine months of fiscal 1995, significant
     investments in inventory  were  made  as  a result of new product
     introductions and to meet minimum purchasing requirements on some
     supply contracts.  This increase in inventory  is not expected to
continue for the remainder of fiscal 1995.                  

     In  addition  to  the  inventory  build  up, final estimated  tax
     payments for the fiscal year-ended June 30, 1994 were made during
the first quarter of fiscal 1995.                           

     The  Company  invested  $4.0 million in new property,  plant  and
     equipment during the nine-month  period  ended  March  31,  1995,
     primarily related to the expansion of the Company's manufacturing
    facilities, compared to $810,000 during the same period in 1994.

     On  September  30,  1994, the Company entered into a $6.3 million
     credit facility with  a  commercial  bank.   The  credit facility
includes the following:                                     

- a $1.3 million Term loan for the payout of existing debt  
        and reimbursement for the early payout of a capital lease on the
Taylor manufacturing facility.                          

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- a  $3.5  million  Revolver/Term  construction  loan  to   
finance the expansion of the Taylor facilities.         

- a  $1.5  million  Line  of  Credit  for working  capital  
purposes.                                               

     The entire Term loan was drawn in October 1994  and,  as of March
     31,  1995,  $2.6  million  had  been  drawn  on the Revolver/Term
     construction loan.  Of these proceeds, approximately $900,000 was
used to pay down other existing debt facilities.            

     The construction project at the Decatur facilities allows for new
     high-speed ophthalmic production, as well as new capabilities for
     suspensions, ointments and unit-dose products.  The total cost of
     the   expansion  project,  including  additional  equipment,   is
     expected  to  be  between  $5  million  and  $5.5  million.   The
     expansion  is to be financed by (1) the $3.5 million construction
     loan  noted  above,  (2)  capital  lease  arrangements  totalling
     $700,000, (3)  reimbursements, up to approximately $600,000, from
     Pfizer  Inc.  under   a  previously  announced  cross-  licensing
agreement and (4) internal sources.                         

     Working capital increased  $806,000  during the nine-month period
     ended  March 31, 1995.   This increase   in  working  capital  is
     primarily  reflected in the growth in inventory noted above which
     is not expected to continue.  This growth in inventory was funded
     from internal  sources  and  from  borrowings under the Company's
Line of Credit.                                             

     The  most  significant  short-term needs,  exclusive  of  working
     capital requirements, continue  to be primarily for the payout of
     previously reserved costs associated  with  the  site transfer of
     ANDAs, which are expected to be approximately $400,000  over  the
next twelve months.                                         

     In  addition,  the  Company  has  been  notified  by the Internal
     Revenue Service (IRS) that, in connection with the examination of
     tax  returns  for  the period of 1988 through 1993, the  IRS  may
     propose adjustments  that  could  result  in  additional  current
     income  taxes and interest payable of $1 million to $1.5 million.
     The Company  accrued  reasonable  estimates related to the income
     statement effects of such exposure  and  as a result there should
     be  no  significant  effects on the Company's  reported  earnings
     should these adjustments  be  proposed and sustained.  Should the
     disputed adjustments be settled  within  the  range  noted above,
     Management  anticipates  that  the  obligations would be paid  in
deferred payments over an extended period.                  

     Existing  working  capital,  net  cash  provided   by   operating
     activities  and the Company's line of credit are expected  to  be
sufficient to provide for these short-term needs.           

     Under  a  previously  announced  cross-licensing  agreement  with
     Pfizer, Akorn  is  required  to  pay  a  performance  penalty  of
     $1,020,000,  should  the  Company  be  unsuccessful  in obtaining
     approval, by December 31, 1996, of a product in development which
     was licensed to Pfizer. Given the current status of the  product,
     Management believes that the likelihood that approval will not be
     obtained in this time frame is remote.  Accordingly, no financial
     statement  reserves  related  to  the potential penalty have been
accrued.                                                    

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                 PART II.  OTHER INFORMATION

Item 1. Legal Proceedings                                   

     Certain legal proceedings in which  the  registrant,  Akorn, Inc.
     (the  "Company"),  is  involved  are  described in Item 3 to  the
     Company's Form 10-KSB for the fiscal year ended June 30, 1994 and
     in Note N to the consolidated financial  statements  included  in
that report.                                                

Item 2. Changes in Securities                               

Not applicable.                             

Item 3. Defaults Upon Senior Securities                     

Not applicable.                             

Item 4. Submission of Matters to a Vote of Security Holders 

Not applicable.                             

Item 5. Other Information                                   

Not applicable.                             

Item 6. Exhibits and Reports on Form 8-K                    

(a)    Exhibits                             

               (11.1)  Computation of Earnings per Share

                       (99.1) Press release issued by Akorn, Inc. on May
                           1, 1995 announcing its third quarter 1995
    financial results.

(b)    Reports on Form 8-K                  

None                          

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                  SIGNATURES

     Pursuant  to  the  requirements of the Securities Exchange Act of
     1934, the registrant  has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.    

                 AKORN, INC.

              /s/ Barry D. LeBlanc
                   _______________________________
                  Barry D. LeBlanc
                 President and Chief Executive Officer
                 (Duly Authorized Officer)

               /s/ Eric M. Wingerter
                   _______________________________
                 Eric M. Wingerter
                 Vice President - Finance and Administration
                 (Principal Financial Officer)

Date:   May 5, 1995                                         

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EXHIBIT INDEX   

                                                          Sequentially
Exhibit                                                          Numbered       
Number       Description                                           Pages        

(11.1)       Computation of Earnings per Share                                  

(99.1)       Press release issued by Akorn, Inc. on May 1, 1995                 
announcing its third quarter 1995 financial results.

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10QSB’ Filing	Date	First	Last	Other Filings

	12/31/96	13		10-K
	6/30/95	8		10KSB
Filed on:	5/12/95
	5/5/95	1	15
	5/1/95	14	16
	3/31/95	1	13
	9/30/94	9	12
For Period End:	9/20/94
	7/1/94	9
	6/30/94	8	14
	3/31/94	2	12
				List all Filings

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Filing Submission 0000906280-95-000037 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Akorn Inc – ‘10QSB’ for 9/20/94

As of: Friday, 5/12/95 · For: 9/20/94 · Accession #: 906280-95-37 · File #: 0-13976

Quarterly Report — Small Business — Form 10-QSBFiling Table of Contents

10QSB — Quarterly Report — Small BusinessDocument Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Quarterly Report — Small Business — Form 10-QSB
Filing Table of Contents

10QSB — Quarterly Report — Small Business
Document Table of Contents